Cloud Computing: No More a Costly Affair for Financial Services Organizations

by | Jan 6, 2022 | Blog

The role of Cloud Tiering in cost optimization

The role of Cloud Tiering in cost optimization

About four out of five people prefer to handle their finances digitally instead of in person. This insight came from a recent survey conducted by JPMorgan Chase Bank, where they studied the digital banking attitudes of 1,500 consumers. Also, the ongoing COVID-19  pandemic and the surge of Fintechs have accelerated the process of digitalization in the banking industry. Today, traditional banks are under tremendous pressure to undergo digital transformations and become more data-driven. 

As a result of the ongoing digital adoption, financial enterprises are generating a vast amount of data. According to TechJury, a $62.10 billion market for big data analytics will exist in banking by 2025.

With the growth of this data comes a challenge related to storing it for financial enterprises

Several factors make data growth a significant concern for financial enterprises:

  • A limited amount of storage space
  • Costs associated with managing massive data 
  • Costs related to the need to buy more and more storage space.
  • Legal and regulatory challenges.

Data security and privacy risks increase with the size of data. As explained by our CEO, Piyush Mehta, cloud computing is a fundamental element of the recent digital revolution in the finance industry. It offers scalable capacity, leverage compute and data resources, and security. Affirming the above insights published by Chase, cloud computing makes customers’ experiences more personalized and maximizes profitability. Thus, it’s not surprising that Cloud Computing has become very popular amongst financial organizations. 

How is cloud computing the answer to data storage challenges faced by Financial Organizations?

While cloud computing is an integral part of digitalization, it also provides a solution to challenges like vast amounts of data storage that come with it.

Cloud storage gives us the flexibility to store all our important data. It could be used for backups, archives, or even extensions of local file systems. In recent years, cloud providers have started offering different storage tiers that let you optimize the use of storage resources, backup data efficiently, save money, and make the best use of storage technology for every type of data. 

Cloud tiering is a form of data tiering. The term ‘data tiering’ came from moving data between tiers or classes within a storage system. Still, it has now also come to mean tiering or archiving data from a storage system to another storage system or cloud. Cloud tiering is increasingly recognized as an essential management tool for enterprise file workloads in hybrid clouds.

 Cloud tiering and archiving allow organizations to move less frequently used data from an on-premises file server or NAS to a more reliable and cheaper cloud storage service, usually object storage, such as Amazon S3, Azure Blob, including Azure File Sync. This is directly related to the reduction of storage space and thereby cost, making it an optimal feature in Cloud Computing. Let’s look a little deeper into the advantages of Cloud Tiering. 

  1. In cloud tiering, cold data is stored economically.

In cloud tiering, cold data is stored economically.

Even though Cloud computing offers inexpensive storage, there are hidden costs. Cloud service providers typically charge for storing and retrieving data and exit/egress fees if the data must leave the cloud. Most cloud retrieval fees appear as API calls to “get” and “put” data into or out of the cloud. This is why organizations must differentiate their data as hot or cold basis usage.

The frequently accessed data is stored in hot tiers and is also known as hot data. The storage costs will be higher, but data access will be immediate, and there will be no or very low access charges. Additionally, there will be no minimum contract lengths for data storage. In contrast, cold tier data refers to data that is rarely accessed but needs to be stored for business purposes. Storage costs are lower, but there are minimum contract lengths. Data is usually not immediately accessible, and retrieval can take hours. Data retrieval is expensive when segregated as cold.

The majority of financial enterprises have not accessed up to 80% of their actual data in more than a year. The on-premises storage array needs to keep only hot data, and the logs and snapshots can be stored in cold data tiering. The capacity of the storage array, mirrored/replicated storage array, and backup storage can be dramatically reduced by tiering the cold data and older log files and snapshots. The result is increased recovery speeds and lower recovery costs. Consider the cost savings that financial enterprises could realize by storing cold data that consumes vast amounts of primary storage, approximately 75  to 90 percent. It is possible to reduce backup footprint, license costs, and storage costs by continuously tiering off unused cold data that isn’t being accessed.

  1. Smooth experience for the end-user.

Financial enterprises are increasingly using cloud computing for core file workloads. Migrating file data to the cloud can take months and disrupt since file data can be extensive, with billions of files. 

A simple solution is to gradually move files to the cloud without changing the end-user experience. With cloud tiering and cloud archiving, cold data can be allocated to a cheaper cloud storage tier while remaining accessible from the original location. Using this approach, users can extend on-premises capacity into the cloud transparently. E.g., Azure File Sync’s optional cloud tiering feature lowers the amount of local storage required while maintaining the performance of an on-premises server.

In addition, cloud tiering makes applications cloud-ready without the need to re-platform them. While applications can continue to play a role as they do now, they can also benefit from the scale and cost-efficiency of the cloud for a large part of their storage requirements. Customers can take advantage of this as an intermediary step in embracing the cloud faster, while long-term re-platforming activities are conducted behind the scenes. 

With cloud tiering and archiving, you can reduce costs, get to the cloud faster, and leverage existing investments with zero disruption.

  1. Cloud tiering helps in managing unstructured data.

Recent research by Fintech Futures indicates that 80% of banking data is unstructured. Along with the growth of unstructured data comes the unfortunate truth that it’s hard to control and secure. Data security and compliance are the most critical concerns when storing financial data. Most of these unstructured data are cold since they are not frequently used. 

VentureBeat reports that over 80% of data isn’t accessed and is thus cold. Banks of all sizes have a lot to gain by managing and migrating cold data to cloud tiers with two significant applications: reducing fraud and improving the customer experience. Therefore, cold data should be studied before making any intelligent cloud tiering decisions to identify compliance risks, business-sensitive data, or data with competitive advantages.

Financial enterprise cloud tiering strategy will not only affect the short, medium, and long-term costs associated with migrating cold data to the cloud, but it will also determine what overall benefits organizations can realize from cloud data migration.

The simplest route for financial services enterprises to kick off their cloud tiering journey

Financial companies can benefit immediately from Cloud Tiering by saving storage space and reducing costs. In addition, it can serve as a strategic first step toward moving to the cloud.  

Every financial enterprise should consider two main aspects when implementing a cloud tiering strategy.

  • Knowledge about data

With Data Dynamics’ Unified Unstructured Data Management Platform, financial enterprise customers can manage their data quickly and efficiently. This unified data management platform detects and tags unstructured data containing sensitive information, providing data custodians with details on managing that data while maintaining privacy and compliance standards.

It evaluates your unstructured data for personal data, protected health information (PHI), and business-sensitive data to determine risk exposure. Data that reveals personal or business-critical information needs to be backed up more carefully than general data. Financial enterprises can minimize the risk associated with such sensitive data by identifying and processing it before moving it to the cloud tiering platform.

  • Migrating cold data to the cloud

Migrating on-premises cold data into the Cloud is often the first and most challenging step in cloud tiering. Cloud service providers are aware of this bottleneck and are developing user-friendly solutions to simplify an organization’s journey to the cloud. Let’s take Microsoft, for instance. The global giant has acquired the Azure File Migration Program – a partnership with Data Dynamics’ StorageX to help financial services enterprises migrate to the cloud at zero license cost!*. Learn how you can begin your cloud migration journey in only three steps with the Azure File Migration Program– zero cost migrations into Azure with Data Dynamics’ StorageX, sponsored by Microsoft.

Click here to check out how Data Dynamics utilized the Azure File Migration Program to help one of the world’s seven multinational energy “supermajors” Fortune 50 companies accelerate its net zero emission goals while driving digital transformation.

The next step, post-migration, is tiering your data. By enabling Azure File Sync’s Cloud Tiering feature, the Data Dynamics unified data management platform helps store only frequently accessed (hot) files on your local server. Files rarely accessed (cool) are separated into namespaces (file and folder structures) and file content. The namespace is local, while the content of the files is stored in the cloud at an Azure file share. Azure File Sync seamlessly retrieves the file data from the file share in Azure when a user opens a tiered file. At the onset, Cloud migration and Tiering in Microsoft Azure is now simple and comes at a zero license cost*. To know about how Data Dynamics can accelerate your journey to the cloud in an intelligent, secure, compliant, and cost-effective manner, contact us at solutions@datdyn.com. You can also visit our website at Data Dynamics or click here to book a meeting.

*Terms and Conditions apply

YouTube
YouTube
LinkedIn
LinkedIn
Share
Instagram